Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024
Net retail interest in the Outside Central Region reached 560,000 sq ft in 2024, over four times the 129,000 sq ft in 2023, while net supply amounted to 603,000 sq ft.
Looking in advance, the island-wide retail openings rate is expected to remain limited this year, which must sustain rental development for prime retail spaces, says Phua. She includes that the market will be buoyed by sustained domestic consumption, a tighter labour market, and a favorable tourism outlook in 2025.
As an example, French sports brand name Salomon opened up avenues at Ngee Ann City and Orchard Central, while Finnish lifestyle company Marimekko started its second site at Ngee Ann City after its 2023 debut at ION Orchard.
On the other hand, Leonard Tay, head of research at Knight Frank Singapore, opines that the relatively strong Singapore dollar and inflationary price stress could spur lots of citizens to redirect their retail investing abroad. “Prime retail rental development for 2025 is expected to relieve and stabilise within a predicted range of between 1% and 3%,” he states.
Rental growth in Singapore’s retail property market listed a yearly increase of 0.5% for the entire of 2024, according to real estate statistics released by URA on Jan 24. This marks the second consecutive year that the regional retail market has actually seen rents increase, after raising 0.4% y-o-y in 2023.
“Rent development potential, however, could be moderated by consumption leakage emerging from outgoing travel and the durability of the Singapore money, as well as stores’ sensitivity to rent out hikes in the middle of a tough and unpredictable operating environment,” claims Phua. Based Upon JLL Research study’s retail property profile, she anticipates rents for prime flooring room of investment-grade retail assets to proceed expanding by 1.5 to 2.5% y-o-y in 2025.
The latest data indicates that retail rents improved 0.6% q-o-q in 4Q2024, establishing on the quarterly increase of 0.3% recorded in 3Q2024.
Angelia Phua, consulting supervisor of research study and consultancy, Singapore, at JLL, says that the latest rentals and cost stats indicate that the recuperation in the more comprehensive retail real property sector is mainly on track despite continuous economic challenges such as usage leakage, the dampening results of rate rising cost of living on usage and expense pressures faced by retail operators.
She includes that brand-new demand for retail area was led by the entry of new-to-market brands and the growth of occurring brands such as F&B, active lifestyle and sports, fashion labels, as well as beauty and wellness products.
Furthermore, the island-wide vacancy rate in the retail property industry slipped 0.3% q-o-q to 6.2% in 4Q2024. This was largely driven by declines in the opportunity rates in the Central Region (falling 0.4% q-o-q to 7.2%) and Outside Central Region (slipping 0.3% q-o-q to 4.3%) last quarter.
” Retailers remain to incorporate experiential aspects right into their bricks-and-mortar stores, to improve the buying experience and drive customer involvement. Zara and Levi’s resumed at ION Orchard in 2024, with Zara releasing express in-store pick-up and Levi’s introduced its very first Dressmaker Outlet,” claims Wong Xian Yang, head of research study Singapore & SEA at Cushman & Wakefield.
Not just prime retail rooms in the Central Region have actually found an uptick in need. Net retail need in the Outside Central Area (OCR) was 560,000 sq ft past year, approximately 4 times the 129,000 sq ft consumed in 2023.
Meanwhile, retail prices dipped 1.3% q-o-q in 4Q2024, nearly getting rid of the quarterly raise of 1.7% that was documented in 3Q2024. Nonetheless, retail prices ended 2024 with an increase of 1.0% y-o-y compared to the 1.2% y-o-y surge notched in 2023.
The downward fad in the island wide retail vacancy pace, which slid for the third sequent quarter, underpinned resilient occupier demand amid a modest supply of retail area this year, states Phua.
Wong indicates that openings rates in the OCR rose somewhat to 4.3% in 4Q2024, up from 4.2% in 4Q2023 however still lesser the pre-pandemic 6.2% in 4Q2019, that reflects a resilient suburban retail market. He adds: “Enhanced connection and assorted retail products, consisting of lifestyle and dining alternatives, have boosted country charm, drawing in respected abroad F&B brands. Japan’s Warabimochi Kamakura and Hong Kong’s Ging Sun Ho King of Bun have debuted at One Holland Village and Tampines Mall, specifically.”